Legislation allows Act 47 cities to triple service tax

A bill set for the state Senate this fall – and backed by Rep. John McGinnis, R-Altoona, and Sen. John H. Eichelberger Jr., R-Blair – would open a legal path for financially distressed cities like Altoona to triple a service tax on anyone working in the city.

The legislation, House Bill 1773, easily passed the state House in June and got unanimous approval last month in the Senate committee Eichelberger heads.

If it passes the Senate, it would allow cities in the state’s Act 47 program to raise the per-person local services tax limit from $52 to $156.

The tax is levied on anyone, residents or commuters, working in a given municipality. And while the 105-page bill contains many other changes for Act 47 cities like Altoona, opponents like state Rep. Jerry Stern, R-Martinsburg, point to the tax ceiling increase as a major concern.

“It would have impacted my district much more than anyone else,” said Stern, who represents most of Blair County outside Altoona and Logan Township. “I thought it was an unfair tax on rural constituents trying to bail out a third-class city’s problems.”

Stern is in the minority: When the bill passed the House, it did so with 156 backers and 42 opponents. On Friday, Eichelberger expressed confidence that it would move quickly in the Senate, as well.

Sponsored by Rep. Chris Ross, a Chester County Republican, the bill adds several significant changes, including a time limit for cities in the Act 47 program.

The program allows cities with financial problems to circumvent tax and contract regulations they would otherwise have to follow.

Eichelberger said the bill provides “other options” for cities to raise revenue, although some options are countered by restrictions on other taxes. If a city government introduces a new payroll processing tax, for example, it must limit other possible taxes.

The local services tax, however, could be tripled so long as all revenue beyond the initial $52 per person is used to help pull the city from financial distress.

If the change was applied in Altoona, for example, both residents working in the city and commuters from outside could see the levy triple.

Stern said many of the city’s largest employers, including the Altoona Area School District, UPMC Altoona and Norfolk Southern, employ huge numbers of Blair Countians who don’t reside in Altoona.

But without the freedom to raise more money, escape from the distress system is difficult, said McGinnis, who voted for the bill in June.

“There’s always reluctance on my part to give (additional) taxing powers, but this is all part of the Act 47 process,” McGinnis said. “At some point, you have to avail yourself of the tax base any way you can.”

In other news:

– Among the State Transportation Commission’s newly revealed work plans are 39 rail freight projects totaling $35.9 million, Gov. Tom Corbett’s office announced Friday in a news release. Money for the work comes from the huge transportation package Corbett approved in November.

“We have continued investments in Pennsylvania’s rail network because it helps keep our transportation assets strong as a whole,” Corbett said in a news release.

In Blair County, Hollidaysburg & Roaring Spring Railroad will receive $295,942 to repair two bridges and improve public grade crossings.

RJ Corman Railroad Group PA Lines will receive $4.3 million to install cross ties and switch ties, renew several crossings, install bridge ties and other track work in Cambria, Clearfield, Clinton and Indiana counties.

– Despite fears that a statewide liquor price hike would become another battle in the privatization war, Liquor Control Board officials announced Wednesday that prices will remain on par for the coming year.

A memo circulated last week in the agency, which operates all the state’s Wine and Spirits stores, suggested officials were considering a 5 percent increase in their standard markup, which stands at 30 percent.

Board Chairman Joseph “Skip” Brion confirmed that the markup wouldn’t go through this year, however, the Allentown Morning Call reported.

– Ron Tomalis, the special higher-education adviser to Gov. Tom Corbett who was revealed to have seemingly few responsibilities for his $140,000 salary, is set to leave his job later this month, he announced Tuesday.

Tomalis was first hired for the newly created job after he left as education secretary. A Pittsburgh Post-Gazette investigation last month found that he appeared to make few phone calls, sent few emails and spent little time meeting with education figures, prompting accusations that he was a “ghost employee.”

Mirror Staff Writer Ryan Brown is at 946-7457 or